Grantmaking Foundations

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 11,600 grantmaking foundations in the US award grants from trust funds to support charitable activities. Top areas of focus for giving include healthcare, education, human services, public affairs, arts and culture, environmental causes and animals, and international affairs.

Market Risk Challenges Investments

Fluctuations in interest rates, corporate earnings, and global financial markets can create a challenging investment environment for foundations.

Facing Public Scrutiny

Grantmaking foundations, particularly public foundations, face scrutiny from the public to provide transparency.

Industry size & Structure

The average grantmaking foundation operates out of a single location, employs about nine workers, and generates $7 million annually.

    • According to the US government, the grantmaking foundation industry consists of about 11,600 firms that employ 104,800 workers and generates $86 billion in revenue.
    • The 238 US foundations surveyed in 2019 received over $9.4 billion in gifts, distributed nearly $8.4 billion to organizations and individuals, and managed over $94.1 billion in assets, according to Candid and the Columbus Survey.
    • The top 50 organizations account for about 38% of industry revenue.
    • Large organizations include the Bill and Melinda Gates Foundation, the Ford Foundation, and the Silicon Valley Community Foundation (SVCF).
    • Most foundations have less than $50 million in assets.
                                  Industry Forecast
                                  Grantmaking Foundations Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Dec 1, 2022 - Lessons Learned From Analysis Of Crisis Grantmaking During the Pandemic
                                  • Simplifying the grantmaking process shortened the overall timeline for approving grants, provided more flexibility on reporting, and temporarily shifted the responsibility of completing grant applications from grantees to staff, according to an analysis of the Walton Family Foundation's Covid Relief Fund. The desire to move quickly meant that some needs that arose later in the pandemic were missed, however. Future programs will attempt to balance immediate needs against emerging needs as circumstances evolve. The Fund also worked primarily with existing foundation grantees. The analysis found that an opportunity for grantmaking to be even more diverse and inclusive was missed as a result of the focus on grantees with whom the Foundation had well-established relationships.
                                  • About 90% of the front-line workers at charities and foundations are burned out, underpaid, and under-appreciated, according to All Due Respect, which works with organizers, executive directors, and philanthropy. The problem arises primarily from two sources: the management practices within charities and foundations, and the practices of funders. Funders, driven by the outcomes they’re pursuing, focus on the programmatic outputs that a grantee partner can deliver, according to research conducted by The Ford Foundation and All Due Respect. Funders may forget to consider the organizational structure that is necessary for that to happen, however. The Ford Foundation found that the top priorities for grantees are not the traditional capacity-building priorities of fundraising, strategic planning, and board development, but organizational culture and human resources.
                                  • Philanthropy is increasingly leaning on donations from a few wealthy donors who make 10-figure gifts, according to experts. MacKenzie Scott has given away over $12 billion in just the past few years. Bill Gates and Melinda French Gates gifted $15 billion to their own foundation in 2021. Elon Musk appeared to have given away over $5 billion late last year, but the money may have gone into a donor-advised fund (DAF), an increasingly popular (and controversial) mode of giving among the rich. DAFs aren’t required to distribute a certain amount of their fund every year, while private foundations have to disburse at least 5% of their endowment. The money could, in theory, sit in a DAF forever while the donor’s tax liability shrinks. The National Philanthropic Trust reports that DAFs received about $25 billion in contributions in 2016. They got almost $48 billion in 2021.
                                  • A growing number of newly created philanthropic organizations around the world plan to accelerate their grant making to give more now and cease operations rather than operate in perpetuity, according to a report from Rockefeller Philanthropy Advisors (RPA). In-perpetuity remains the dominant time horizon for a significant majority of organizations (74%), but adoption of time limited philanthropy has increased over several decades. Just 7% of foundations established in the 1990s were time-limited, but 33% of those established from 2010 through 2021 adopted a time-limited model. The time horizon chosen by a philanthropy has significant implications beyond the operations of that organization, according to RPA. The decision between “giving while living” and in perpetuity directs a funder’s approaches, resource allocation, issue areas, and relationships with the greater ecosystem of beneficiaries and partners.
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